Vanishing China execs a vexatious mystery for HK market

HONG KONG (AP) — The chairman of the Hong Kong arm of one of China's biggest securities companies goes missing. The head of another firm resurfaces after months incommunicado. An executive at a film studio is detained for allegedly taking bribes.

They're not plot outlines for crime novels but real life cases lifted from the normally dry Hong Kong stock exchange filings of Chinese companies over the past year.

The latest example came Monday when Guotai Junan International Holdings Ltd., the Hong Kong unit of a Chinese securities company, said it was unable to reach its chairman and chief executive Yim Fung since Nov. 18, sending its shares plummeting 12 percent.

Speculation swirled in local media that his disappearance was related to a recently launched investigation into a senior official at China's securities regulator. That probe is part of a broad crackdown on the finance industry following China's stock market meltdown over the summer. The company said it would appoint temporary replacements for Yim but declined further comment.

Such cases would be highly unusual for other global financial centers, but have become commonplace in Hong Kong, where the city's stock exchange allows international investors to access an increasing number of mainland Chinese companies.

They highlight some of the risks of investing in China's public companies, which operate in an opaque political and legal system, and face additional uncertainty because of President Xi Jinping's ongoing and wide-ranging assault on corruption.

"It shows on one level that investing in some of these companies is quite risky," said Jamie Allen, secretary general of the Asian Corporate Governance Association. "It also says a lot about the legal and political system in China. China doesn't have a system of law like Hong Kong. In China you can disappear."

Hong Kong is a former British colony that's now a specially administered Chinese region with legal and financial systems that are separate from mainland China's.

Among the Hong Kong-listed Chinese companies that have reported missing executives this year:

— Waste disposal company Dongjiang Environmental Co. last month suspended its shares from trading because it couldn't reach Chairman Zhang Weiyang before a scheduled board meeting. The company said it later found out from Zhang's family that he was being investigated "by the relevant authority" in China, although it didn't say why.

— Shopping mall and department store operator Century Ginwa Retail Holdings said in September that its chairman, Wu Yijian, who went missing in mid-May, had resurfaced and gone back to work. He explained to the company that he was "assisting the relevant department" of the Chinese government with an investigation while he was away, without disclosing further details.

— China Aircraft Leasing Group said in June it was not able to reach its CEO, Mike Poon, after he submitted his resignation while he was in the middle of his annual vacation. The company said Poon didn't give any reason for his departure in his resignation letter. Nor did he make any reference to news reports in Hong Kong and mainland Chinese that said he might be caught up in a Chinese government investigation into China Southern Airlines, which is a customer of China Aircraft Leasing.

Aside from disappearing executives, much more clear-cut announcements of alleged wrongdoing are a recurring theme at Hong Kong-listed Chinese companies.

Among the slew of cases this year, Alibaba Pictures Group Ltd., the film arm of the Chinese e-commerce giant, said one of its directors, Patrick Liu Chunning, was detained by the Public Security Bureau in connection with an investigation into the "alleged receipt of bribes" while Liu worked at Internet company Tencent Holdings. The company said the charges were unrelated to his employment at Alibaba.

A Chinese investigation is not always the only reason for an executive's disappearance.

Pearl Oriental Oil Ltd. said in late September it was unable to contact Chairman Wong Kwan, who had been due in a Hong Kong court on fraud charges.

In October, police in Taiwan freed him from a gang of kidnappers who had been holding him captive for more than a month and demanding a ransom of HK$70 million ($9 million).

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This story has been corrected to show that the missing chairman in the first paragraph worked for the Hong Kong unit of the Chinese securities company, not the parent company.